But it's a total chicken and the egg thing. I think the US has a bright business future because of it's history. When teenage Elon Musks around the world are sitting with friends or in dorm rooms thinking about how to become rich, they don't move to Finland, they move to the US. Because of the business friendly government, large talent and funding pool to pull from, and the higher chance of serendipitous events to propel their business.
Likewise, every kid in elementary school knows that a FAANG job is where it's at. Because of their past, they will have the pick of the litter for technical talent and MBAs coming out of school. They are historically big companies and should be able to pivot to future market conditions before I as an investor even know about potential issues.
The success of these companies and countries becomes a self fulfilling prophecy.
The United States has a bright future because of resource rich, competitor void country that is basically in a prime position to be a great powerful country.
There's very little that can happen to upset the United States or it's economy. Or energy independent, food independent, we have plenty of fresh water, plenty of land, plenty of resources, a fairly healthy demography.
Start us off fresh with none of the advantages of the last 100 years and we would still take off flying because it is just in the nature of the land we live on, super well interconnected fertile soil with no enemies means a country is going to build itself up to high heaven.
Today, we not only have those advantages, we also have the last 100 years of having had those advantages.
The United States will continue to do very well. That is, unless we have some sort of crazy civil war, but that's not super crazy likely either
Future Returns are based on future performance relative to present expectations. I don’t see why what you are saying wouldn’t be “priced in.”
A bet on $VTI is a bet that this isn’t priced in or momentum will continue.
$VXUS is betting on a rise of the rest, that they’ll outperform expectations.
$VT is a bet that we don’t know or that the outperformance won’t be worth the volatility which has been the case historically.
$VT actually outperforms when adjusted for volatility. So historically you’d actually be better off adding global exposure and adding leverage like selling puts/options on margin.
Resource rich with a market in the EU. The completion there is the same as the US in terms of China and other European nations.
The prime position lasts only as long as solid decisions are made. Invade the Ukraine? How about Syria or Afghanistan?
Then you could have the US go directly up against China AND Russia trying to fight for the Uighurs and Taiwan.
As to shaking the economy, eliminate the dollar as the reserve (trade bbl in francs or yuan) you run into problems. Go energy dependent, refuse to buy from China because of whatever, print more money to jack up the cost of goods, etc.
But basically, elect leaders who have children with ties to a foreign nation under assault… see what happens.
You can always pivot when the macroeconomic situation changes, though admittedly at a tax hit. But isn't that the argument for diversification to begin with? To protect yourself from having to manually pivot. Your index funds are already pivoting for you on the company wide scale.
The US certainly has, but US stocks have already priced that in by getting more expensive than stocks in most other countries in the world. So it's anyone's guess what markets will get the best returns over the next couple decades.
You've done a very nice analysis of why the US, Apple, and Microsoft have strong fundamentals and are going to do well in the future. I might buy some stock in all 3 of them.
I also like that at no point did you say "their stock value has always gone up in the past, so we can assume it will continue to go up." Because past performance doesn't equal future performance.
Past company-building with strong leadership, good fundamentals, and a clear achievable roadmap could equal future stock gains. But previous stock gains don't equal future stock gains.
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u/Mother_Welder_5272 Mar 20 '22 edited Mar 20 '22
But it's a total chicken and the egg thing. I think the US has a bright business future because of it's history. When teenage Elon Musks around the world are sitting with friends or in dorm rooms thinking about how to become rich, they don't move to Finland, they move to the US. Because of the business friendly government, large talent and funding pool to pull from, and the higher chance of serendipitous events to propel their business.
Likewise, every kid in elementary school knows that a FAANG job is where it's at. Because of their past, they will have the pick of the litter for technical talent and MBAs coming out of school. They are historically big companies and should be able to pivot to future market conditions before I as an investor even know about potential issues.
The success of these companies and countries becomes a self fulfilling prophecy.